- Kraken, a leading U.S.-based cryptocurrency exchange, is moving ahead with plans to launch its own crypto bank despite regulatory challenges in the crypto sector.
- The launch of Kraken Bank, which will be based in Wyoming, will offer comprehensive deposit-taking, custody, and fiduciary services for digital assets.
- Kraken recently reached a settlement with the U.S. Securities and Exchange Commission (SEC), agreeing to pay $30 million in fines and ceased offering its crypto staking program for U.S. clients.
Kraken, the leading cryptocurrency exchange platform based in the United States, has confirmed that it is moving ahead with its plans to launch its crypto bank despite the challenging regulatory environment. In a recent interview, Kraken’s chief legal officer Marco Santori stated that the company’s banking relationships were secure and that the launch of Kraken Bank was “very much on track.”
The crypto sector is currently facing tumultuous times, with the widespread fallout from the collapse of FTX and multiple enforcement actions from regulators in recent weeks. Despite this, Kraken is determined to move forward and bring a new bank to the crypto industry. The company has been working on this project for several years, and in 2020, the State of Wyoming approved its creation of a Special Purpose Depository Institution (SPDI).
Kraken Bank will be based in the state of Wyoming and aims to offer a more seamless integration between the traditional financial system and the crypto world. The bank will initially be available to exist Kraken clients in the U.S., with potential international expansion in the future. It will be the first regulated crypto bank to offer comprehensive deposit-taking, custody, and fiduciary services for digital assets.
Regulatory Issues Faced by Kraken
The launch of Kraken Bank comes at a time when the regulatory environment for cryptocurrency businesses in the U.S. is becoming increasingly challenging. The recent settlement between Kraken and the U.S. Securities and Exchange Commission (SEC), in which the company agreed to pay $30 million in fines, has put the entire crypto industry on notice. The settlement also resulted in the cessation of Kraken’s crypto staking program for U.S. clients.
Santori didn’t discuss the SEC settlement in detail but stated that staking had only been a small percentage of Kraken’s revenue. He added that the SEC would force American clients who wanted staking services to use far riskier offshore exchanges, indicating a “pretty unfortunate situation” in the U.S. regulatory environment.
The recent shuttering of Silvergate Capital Corp., a crypto-friendly bank in California, has also added to the rising caution in the banking industry toward crypto businesses. Santori warned that increased caution from banks could stifle innovation in the sector, becoming a “really tough road” for new companies in the crypto economy in the coming years.
Kraken Remains Committed to Launching its Crypto Bank
Despite the challenges, Kraken remains committed to launching its crypto bank, and Santori is confident that the company, along with Coinbase, will be able to weather the regulatory storms. He does not believe there is a conspiratorial crackdown on the crypto sector in the U.S., but rather a group of regulators who share similar views on crypto. He believes that regulators see what crypto is today as the most important aspect rather than what it could be in the future.
Despite the regulatory headwinds faced by the crypto industry, Kraken is moving ahead with its plans to launch its crypto bank. The company has been working on this project for several years and has secured the approval of the State of Wyoming to create an SPDI. The launch of Kraken Bank will make it the first regulated crypto bank in the U.S. to offer comprehensive deposit-taking, custody, and fiduciary services for digital assets.